New amendments to the EU Posting of Workers Directive providing mandatory rules for employers on the minimum protection

Although the EU Posting of Workers Directive (Directive 96/71/EC) did provide mandatory rules for employers on the minimum protection for posted workers and tried to establish a process for member states to ensure the rules were being respected, the way the directive was implemented in the national law of each member state left a relatively uneven environment for workers and also made it difficult for employers to have certainty that the treatment which applied for worked posted to their country would be sufficient for workers which they posted to another member state. 

Based on these insufficiencies, there was pressure from several larger member states which had high levels incoming workers to have clearer rules which would protect posted workers from so called “social dumping” and prevent the unfair or illegal employment posting arrangements which hurt both local employees and posted workers.  This resulted in the adopting of “Directive 2018/957/EC of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services”.   This Directive needed to be implemented into the national law of each EU member state with effect from 30 July 2020.

The new Directive makes significant changes in several areas but given the limited amount of postings which were able to happen prior to the travel restrictions which were put in place due to the COVID-19 pandemic, it may be useful to present a short summary of the main areas which have been substantially revised.

Clearer notion of remuneration which must be provided to posted employees

While the original Directive attempted to protect posted workers by stipulating that must be provided with minimum rates of pay which were in place in the member state to which the posting took place,  the new Directive clarifies that the remuneration should not be considered as the minimum wage but rather the gross wage which follows from the national law, practice  or collective agreements applicable in the member state where the worker is posted.  The gross wage should also include any additional amount besides base salary that must mandatorily be provided to the employee in the host location (with the exception of supplementary retirement pension plans and severance-related payments). 

This will require employers posting their employees to other EU member states to gather information on what minimum levels of remuneration must be provided for a certain position in a certain employment sector.  It also would require employers to review the scope of remuneration that is considered as mandatory in the country of posting (e.g. payments for overtime, work on weekend, nights or public holidays, being on standby status for the employer, work performed under difficult work conditions, etc.).

Clarification on the treatment of allowances and reimbursement for cost for travel, board and lodging during business trips. 
The updated Directive makes it clear that if these amounts are provided to employee to cover expenses incurred in connection to the posting, they should not be considered part of the employee’s remuneration for the purpose of meeting the minimum levels of required remuneration in the country of posting.  This change may have increase the cost of posting employees to other member states as the employee would have a right to receive the minimum mandatory level of remuneration in the country of posting plus reimbursement for the assignment related expenses (if required by law from an employer’s point of view).

Different treatment of employees sent on short-term and long-term postings 

One of the most significant changes relates to the treatment which needs to apply on posting of employees to other EU member states for a period exceed 12 months.  If an employee will be sent by his employer on a posting which will exceed 12 months, the employee will be entitled to receive the same remuneration received by employees performing the same work in the posting country (equal pay for equal work concept) as well as the same labour law entitlements. The only exceptions to this requirement are supplementary retirement pension plans and severance-related payments.

 This new approach will have a large impact on the long-term assignment of employees to EU member states which have higher levels of remuneration (i.e. from CEE countries point of view, this would mean the majority of EU member states).   It may also require employers to consider carefully if employees need to be sent on assignments longer than 12 months (the extension of a short-term assignment to 18 months is possible but notification of the reasons for its extension before the end of the 12 months period is needed). 

Changes in responsibility for reporting obligations

To increase the level of protection for posted workers, the update Directive has raised the requirements related to reporting and exchange of information on posted worked between the country of posting and posting country.  

Example of the new Directive implementation in CEE – Czech Republic

In the Czech Republic, whereas the original implementation of the Directive required the recipient company (i.e. the company to which a foreign employee was posted) to file reports with the Czech Labour Office, the implementation of the updated Directive requires the foreign employer posting its employees to the Czech Republic to notify the Czech Labour Office using a special form which has details in respect of the posting.  

The Czech Labour Office needs to be informed about the posting by the first day of an employee’s posting to the Czech Republic and within 10 days of the end of an employee’s posting.  There are also requirements related to the translation of employment contracts into Czech, keeping evidence for statistical purposes, and additional obligations for foreign labour agencies posting workers to the Czech Republic.

Fines ranging from approx.  EUR 4 000 to EUR  20 000 may be assessed by the Czech Labour Office for failure to meet the requirements mentioned above.

Czech companies posting workers to other EU member states will need to review the requirements which exist in the other country to determine whether it is the obligation of the sending or receiving company to meet the reporting requirements related to posted workers.